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Return to: The Daito Bunka 2000 Lectures

The G8 and Global Governance:
The Role of Canada, Japan and the United States

Daito Bunka University
Lecture #2 (special)
July 11th, 2000

NOTE: This lecture continues the material covered in lectures 1 and 2, so the plan is different from the course syllabus.

Let me start with some administrative details. For the next few days you'll be busy reading the core texts. So I would like everyone, starting tonight if you can, to start at the beginning of Jun Takase's book Summit and in the coming days read through it. This is a brand new treatment of the summit, from the beginning to now. It's a nice, historical overview, one that emphasizes the role of Japan and, of course, is focused on the Okinawa summit to come. And then, we also start with the North Pacific Triangle book, with the introduction, which is very short, and then with the chapter I have written .

Later on, if you would like more readings, we can give you those. There are some extra sources in the syllabus, but we can give you more. Most of these are in English, so you may need some time to absorb them.

Secondly, sometimes my English can be a little difficult to understand my students at home tell me this. So to help, after each lecture Madeline will be preparing a written copy of my lecture in English, and we will give you each a copy.

Let's start by asking the question of what is global governance, and then look at the very different forms of global governance in the world over the past many years, and then come to the G7 and ask why it is particularly effective as a form of global governance, and in particular how the United States, Japan and Canada behave as principal power within the G7 to make the G7/G8 work effectively.

First, global governance. What is governance? It's a relatively new world for students of international politics. It means, quite literally, from its Latin origins, steering, as one would steer a sailboat. We can also think of governance as shaping, shaping the values that prevail that world, that dominate what we call international order, the basic principles that govern the behaviour and other actors as they deal across international boundaries in the world. Governance, then, is steering and shaping the outcomes, the results so that some countries win, some communities win and so some values, rather than others, prevail. This is thus consistent with what we have long understood politics to be about at the core. Do you remember take your mind way back to your first course in politics what is politics? Politics, said David Easton, is the authoritative allocation of values. Or we can think about Harold Laskwell, writing even before David Easton for him, politics is about who gets what, when, where and how. Or simply, who wins, who loses. That's what politics is governance, steering behaviour toward particular outcomes, values, particular countries, communities and their values. That's what governance is all about.

But there's one important difference. When David Easton gave us his classic definition of politics being the authoritative alolcation of values, he used the word "authoritative." He was thinking of domestic government. Within Japan, as within Canada or the United States, there is a process of interest groups, political parties, elections, but at the end of the day someone wins, and their views become law, and that is authoritative. It is enforced by the police authorities and in the courts, and no one else is allowed to challenge them, not domestic criminal organizations, and not forces or actors from the outside, such as AT&T. Domestic politics is a self-contained sphere, a sovereign state. Sovereignty means indivisibility of command: one law across the whole law. It is authoritative what values prevail within the state. That definition is still good when we look at politics within a single country. In fact, when we look at governance within a single country, we can think about authoritative allocations.

But when we become students of international politics, when our attention turns to global governance, there is no single source of authority or authoritative allocations in the world.

So if we were to look at domestic politics we could speak about authority but when we look at global politics and governments, there is no single source of authority. That's why we can only think of shaping or steering outcomes, rather than authoritatively allocating values. The United Nations would like to be the authoritative centre of global governance, but it is not. Some would like to believe that international law would have binding force on countries and on citizens. Many Canadians would hope that the recently created convention to ban the use of anti-personnel land mines would xxx but in the world as a whole, in the world of global governance, neither the United Nations nor international law can shape outcomes with authority.

Why is that? Well, it's because the international system can was created a long time ago to give a premium to the prerogatives of something called sovereign nation-states. Sovereign nation-states like Japan, Canada, the United States they keep the authority themselves and will not give it to any intergovernmental organization such as the United Nations.

This basic arrangement of a world dominated by sovereign nation-states came into being a very long time ago. In fact, the usual date of when this world was created is 1648. It was then that in Europe the authorities of the time came together and signed the Treaty of Westphalia, which said that they all agreed that they wanted to live in a world of sovereign nation-states, not one in which feudal lords within a state had the authority, both in their own territorial domain and in others, nor in a world where religious authority for example, the pope had authority over subjects wherever they were. Rather, they wanted a world of sovereign nation-states, a nation-state like Japan, within its own territory, its government exercises authority and can allocate values within. So 1648 was the big bang, the creation of the modern inter-state system that exists still today.

In a world of sovereign territorial nation-states, how would they agree to govern or manage relations with each other? The answer to that question has varied widely over time. Leaders of countries of the world started a long, slow process of learning. For the first 170 years, their answer was the balance-of-power system, which dominated from 1848 through to 1817. The balance-of-power system said that if one was faced in the world with one very powerful country that wished to expand through war to control the world as a whole, that country would be dealt with much as a schoolyard bully would be dealt with.

The balance-of-power system said that whenever a large, expansionist state emerged, like a schoolyard bully, all of the other countries, like classmates, would join together to balance the bully. If necessary, in the international system, they would combine their power and fight a war against a large state before it could dominate the world.

After a hundred and seventy years, it seemed that the balance-of-power system as the dominant form of global governance worked badly. Why? You had to fight a lot of wars against bully, and it almost failed in 1817, when Napoleon's France almost made it to Moscow and became a country that would dominate the world.

So, in 1818, a second system began: the Concert of Europe. The leaders of the major powers that had finally beaten Napoleon gathered for the Congress of Vienna in 1818 to bring into being a new form of global governance to create a world restored. This concert system, this Concert of Europe, included all the major powers and worked very well indeed. For one hundred years, there was no major war in the international system no war in which many of the major powers were engaged, none of the most deadly kinds of war that exist.

But mistakes were made toward the end of the period, perhaps because of the complacency bred by the long peace and the increase in prosperity that peace brought forth. So the system broke down and the First World War took place from 1914 to 1918, and at the end of that war a third approach to global governance, a new system, was put in place.

That third approach to global governance was a system of collective security, not concert governance. This system was enforced by a new international organization, the League of Nations. This system of collective security was a spectacular failure. Within fewer than fifteen years it led to a great global depression, which helped tyrants, such as Adolph Hitler, to power in Germany. In the Asia-Pacific region it forced some countries to take desperate actions, and as a result in September 1939 another world war broke out. That war, the worst ever, brought untold horrors including genocide, the extermination of seven million Jews in Europe, and at the end it brought the use of the most destructive weapon ever, the first use of nuclear weapons.

When the leaders of the victorious powers in the Second World War met for a new peace conference in San Francisco in 1945, one might have thought that they would have agreed that this whole system of collective security was fundamentally flawed and should be replaced. But this they did not do. What they did instead was put in place a new sysem of collective security based in the new United Nations, but a system that still had the fundamental flaws of the original collective security system created by the Treaty of Versailles in France in 1818. France in 1918, San Francisco 1945. Whether France, the United States, xxx the same approach of international institutions to implement a set of concepts and ideals about global governance that was fundamentally flawed.

There are many differences between a concert system of global governance and a collective security approach to global governance, but I will identify only one now. In 1818, in the concert system, those major powers that had lost the war France were instantly admitted as equals to the new centre of global governance, to the Concert of Europe. Even though they had lost the war, the other major powers said, "You are a major power, we will treat you as a principal power and you will join with us to help govern the world. In 1945, at San Francisco, following the logic of collective security, they looked at defeated Germany and Japan, and they said, "We are going to keep you out, we are going to freeze you out. You will not be a member of the permanent five of the United Nations Security Council. In Europe we choose China and freeze Japan out, and in Europe we choose France and freeze Germany out." Just to make sure everyone got the message, they included the clause "in perpetuity" Germany and Japan will be treated as enemy states forever.

Those are part of the values of the collective security of system of global governance encoded to this day in the United Nations. Those are the values. If you believe in the United Nations, if you believe in the collective security approach to global governance, you as a citizen of Canada or the United States are told to look across the Pacific at Japan and across the Atlantic to Germany and treat the citizens of those countries, or their ancestors, as citizens of enemy states. Almost no one in Canada believes that. The values of that system are badly out of touch with the values of people of the United States and Canada, and I'm sure with the citizens of Germany, Italy and Britain as well.

In 1975, however, a fourth phase to the approach to global governance started, That year saw the birth of the modern, democratic, now global, concert, with the G7 at its core, much like the old Concert of Europe, but with some different features. This new approach to global governance, G7 concert governance, as with the United Nations, claimed to shape outcomes in the entire world for the international community as a whole. But to do so it took a profoundly different approach. The G7 concert said to Germany and Japan, "Come in to the inner core as a full member. You are one of us and we will collectively govern the world." Before it had finished its first twenty-five years, in 1998, the G7 said to Russia, "You are now a democratic country. You can join our democratic concert."

We are now approaching the fifty-second anniversary we are in the second half-century of the United Nations charter, of those permanent five on the Security Council. How many members have been added? China, added xxx The United Nations has added, after fifty years, not a single one. Not Japan, not Germany, despite their vast power in the world.

Membership makes a difference. Reflect on the differences. What do the United Nations, with its permanent five members of the Security Council, have in common, and what the members of the G8, because of its members who are members only of the G8 and not the permament five, and what values do they share. Think of those difference and ask what values would you like to prevail, as we launch into the twenty-first century,.

Let me just take a moment to start the reflection and give you simy thoughts. The permanent five members of th eUN Security Council, who after 52 years will admit no other country. They are the US, Russia, the People's Republic of China, France and ZBritain. Onething they have in common, and they are almost alone amongst the 200 countries in this respect, si that they have all chosent to spend their taxpayers dollars to create and maintain independent nuclear weapon capacity. In fact, one of those countries ahs actually initiated nuclear war.

Let's start with a few words about the assignment of the course, which is listed on page 6 of the syllabus. This is a final take-home examination that you must submit at noon on Monday, July 17 (not 9 a.m. as indicated on the course syllabus). I'm asking you to answer one question with an answer of 1,500 words. You can write in either Japanese or English. If you write it in Japanese, Haruka will read it and tell me what you say; I will mark it. If you write it in English, I will read it directly, so it's easier for us if you write in English but more difficult for you. So as I said, I will give special consideration for everyone who writes in English. You can even write in both languages! But we're only asking for one language.

Because this is a busy time of year, I've given you the questions in advance. The questions are fairly straightforward and address the major themes we're dealing with in the lectures. So if you'd like to start writing your take-home tonight, you can, and as we go through the week if you would like to speak to Gina or me about your answers you can. If you'd like to speak to Haruka about your answers in Japanese, you can do that too. You'll see that the first question why are some summits successful while other are not is exactly the question we're going to begin with this afternoon. So you might like to pay special attention today to get a head start.

Last class we looked at three hundred and fifty years of global governance in the international system since the creation of this basic network of sovereign territorial nation-states. We saw that over the three hundred and fifty years the international community took four quite different approaches to global governance in the system to the way in which they ordered the relations among those sovereign territorial states, and according to the basic values they promoted as a result.

The first system, from 1648 to 1817, was the balance-of-power system, a system that preserved most territorial states, preserved especially the major powers or principal powers in the system, but did also by its very design produce a great deal of very destructive war. That's why at the end of the most destructive war, the Napoleonic war, the victor powers in 1818 at the Congress of Vienna put in place a very different system: the Concert of Europe, in which the victorious powers joined with the defeated powers to come together to manage the system in which war was forbidden, in which each of the members of the concert promised not to take advantage of other members, in which each of the members of the concert the major powers agreed that changes in the international system, particularly territorial change, would require the agreement of all members. It was consensus decision-making. They agreed that whenever there was a crisis, the leaders of these powers would gather together to decide collectively what should be done. Those were the basic rules of the concert system.

Yesterday we identified just the first that the defeated powers in the war would be admitted in the inner core as full members of the concert and treated as equals. From that initial principle all these rules flowed.

The concert system was highly successful. It produced a century of peace at the core of the international system. There was no war among the major powers of the system. It also laid the foundation for a century of increasing prosperity, both within Europe and in many places around the world.

But in 1918 at the end of the First World War, the principles of the concert were forgotten and a third system was put in place. This third system the collective security system embodied in a new international organization, the first ever with a charter and its own international bureaucracy: The League of Nations, headquartered in Geneva. That collective security system was one in which the enforcement of peace was to be automatic. If one state were to commit aggression it would not be the collective responsibility of just the major powers to protect. The idea of collective system is that every other country in the system would automatically go to war against an aggressor, real or perceived.

That system was a failure in part because the U.S. refused to join, in part because the system was put in place to enforce a very vindictive peace against the country that had lost the last war the Germany of the Weimar republic. Adolph Hitler was able to play on those frustrations, on that sense of injustice and lead some major powers to leave the League of Nations so that war came again in 1939. At its conclusion, collection security was tried again, this time entrenched in the new United Nations. In subsequent years, there was no Hitler to create a new world war, but the collective security system was still unable to prevent the cold war between the U.S. and the Soviet Union from arising within a few years of the creation of the United Nations, and bringing enormous costs in the subsequent 40 years.

In 1975, with the creation of the G7, there arose a fourth approach to global governance. It was in part a return to the principles of the old concert, but this time in a modern form. This was to be a concert in which all major powers were admitted, even those Japan, Germany, Italy and Canada that had been excluded from seats in the inner core of the collective security system created in 1945. The UN Security Council the permanent five members, each of which exercised a veto. But the new concert of 1975 had one fundamental difference from its predecessor of 1818. The original concert had included both relatively democratic countries, such as Britain, and quite undemocratic countries, such as Czarist Russia. The new concert of 1975, the G7, allowed any major power in as a full member regardless of whether it had won or lost the last war, but it allowed a country in only if it met one other condition: it had to be a democratic country as well. The contrast was quite clear. The UN Security Council, with the P5, admitted to the centre of global governance only those countries who had won the last war, whether they were democratic or not. That's why the Soviet Union along with China joined the U.S., Britain and France as members of the P5. In sharp contrast, the G7 concert admitted all powers as equals regardless of whether they were the victorious or the vanquished in the last war, but it demanded that they all be democracies.

So which of these two different institutions the UN Security Council or the G8 was likely, in the last quarter of the 20th century to become the effective centre of global governance? If one compares their members in 1975, two striking differences appear. Both bodies the UN and its P5 at its core shared some common members: U.S., Britain and France. The UN Security Council added uniquely the two communist powers of the Soviet Union and the People's Republic of China, which had acquired a seat for China in the 1970s. On the other hand, the G7 had uniquely as a member Japan, Germany, Italy and Canada. If you wanted an effective centre of global governance, and thus wanted an international institution that had the most power behind it, the most of the principal powers in the international system, and the principal powers with the most capabilities, which would you choose?

In overall terms, even in 1975, Japan was the second most powerful country in the world, and Germany almost certainly the third most powerful. In a moment we'll come back and ask what we mean by power, but it seems to me, particularly from what we know now, with the collapse of the Soviet Union, that the G7 had a decisive advantage in combined power, in concerted the power of the most powerful countries in the world to ensure that what it decided collectively would actually shape outcomes in the world as a whole.

There was a second difference, not only in power but also in popular appeal. A difference in the very values at the core of the two systems. The P5 were united not by whether they were democratic or autocratic; they included countries from both camps. Defending democratic principles and all that flowed from it human rights, for example one could not expect to be a particular value of the UN's P5. Rather their essential value was probably one that was first invented way back in 1648, when this world of sovereign territorial states was created. That principle was embedded in Article 2, Subsection 7 of the United Nations. It declared that no sovereign country should interfere in the internal affairs of another sovereign state.

The values at the core of the G7 were fundamentally different. In fact, they were the very opposite. In the UN's P5, the ultimate values was noninterference in the affairs of a sovereign state and what united those five major powers was that they all sought security through the traditional methods of building up arms. All, in fact, were states with nuclear weapons. In contrast, in the G7 all the major powers were democratic polities, and all by the basic principle of the concert when it was formed, declared that they reserved the right to interfere in the internal affairs of their own countries and in fact in the internal affairs of every other country in the world in order to defend the principle of democratic governance domestically.

This, they said, in the document we can take as the charter of the G7 the declaration at the end of the first summit in Rambouillet, France when they collectively declared, "We are the leaders of democratic societies, our success is important for the success of democracy everywhere in the world." Given that core purpose, during its first twenty-five years the G7 system was a striking success. In the first instance, in the late 1970s, it defended democracy in its own members against a Euro-communism that was sweeping through southern Europe. Italy remained most notably in the democratic community. Toward the end of the 1980s, it took up the issue of Apartheid in South Africa and began to take collective measures that helped bring about the end of the Apartheid regime and put in its place democratic majority rule. In 1989, when the leadership of the People's Republic of China allowed their armed forces to engage in the mass murder of unarmed civilian students at Tienanmien Square, the G7 did not say that is an international affair of a sovereign China. and we have no right to interfere. Rather it did opposite and put in a series of sanctions to prevent the People's Republic of China from undertaking similar actions in the future. In that regard it was successful as well.

Above all, it brought about the "Second Russian Revolution" taking a militarily expansionist, authoritarian Soviet Union and transforming it peacefully into a functioning democratic Russia today. It did so by uniting the democratic countries against a Soviet expansion, most notably when the USSR invaded Afghanistan on Christmas Day 1979 created the second cold war. The G7 continued by mounting major program for economic assistance for a reforming Russia, and by increasingly allowing Russia into the G7 itself. These were ways to reward emerging democrats in Russia, to help teach Russia how democratic societies function, to lock in place the Russian revolution, and to give Russia a new identity as a major power in a democratic club.

So over the last quarter century, the G7 compared to the competing centre of global governance, the UN has been a striking success. But if we look within the G7 at each of the annual summits, we find that the G7 has been far more successful on some occasions than others. In fact, on some occasions it has been a notable failure indeed.

Let's look at the record by turning to our table, Achievements of the G7/G8 Summits, 1975 to 1999. These grades have been assigned by the great scholar of the G7 system, Sir Nicholas Bayne, and come from his latest book titled Hanging In There. What we see is that in the early years the summit got off to a fairly good start. The first summit in Rambouillet earned an A-. Puerto Rico looked like a failure, with a D, but in 1977 London 1 earned a B-, and in 1978 Bonn earned an A, the best ever. And a year later, Tokyo 1, the first summit hosted by Japan, earned a very impressive B+. So good marks in those early years a high-performing summit system, even if the odd human failure take place now and then,

Then came a long period of low performance for the summit. The marks fell into the C range, and despite the occasional B and B+, into the D range, the C- range, even the E range as well. By Venice in 1987 the mark was a D. Even in Toronto in 1988, the marks rose only to a C- thanks to a program for debt relief for the world's poorest countries, the so-called Toronto Terms. At the end of the Toronto summit, looking back over the past decade, there was little to suggest to anyone that the G7 could be an effective centre of global governance in the highly eventful decade of the 1990s that was about to come.

Beginning in 1989 the summit moved into a third phase and bounced back to become a high-performing institution, an effective centre of global governance yet again. Paris in 1989 earned a B+, London in 1991 earned a B-. Tokyo 3 in 1993 earned a C+. Halifax in 1995 earned a B+. From that time on marks had been pretty consistently in the B range.

Yes, since 1989 there have been some disappointments, as shown by the D in Houston in 1990 and by the C- in Denver in 1997. But with the one exception of Denver, for the past five years at least, since 1995 Halifax, the G7/G8 system is one you can count on to perform consistently in the B, indeed B+ range. An effective centre of global governance year after year after year.

Why do we observe this three-phase pattern of high-performing summits at the beginning of the G7 in the 1970s, then the low-performing summits of the 1980s, and then a steady rise toward mid- and high-performing summits as we move through the 1990s to the present? How do we explain that? There are several different explanations. I'm sure at the end of the course you'll have your own views, but for the moment we can note the four major competing explanations, summarized in the table entitled Models of G7/G8 Cooperation and Compliance.

Some of these four competing explanations look at the same factors but interpret them differently. Today we'll focus on the first two explanations. The traditional theory or model of American leadership was first advanced by Robert Putnam and Nicholas Bayne in 1984 in their classic work on the summit, called Hanging Together. The second, and major competitor, is the model of concert governance, first advanced by William Wallace, and one that I've developed and am outlining in this course.

The first and traditional model of American leadership argues that summits succeed when three factors are present. The first, and most important, is an America able and willing to lead with the support of one other major G7 country. This is a very particular argument. It says that only the U.S. can lead in the summit. Only the U.S. can take initiatives. None of the other countries can. And when the U.S. chooses not to, summits will fail automatically. When the U.S. does, you don't necessarily succeed, as you still need support from one other major summit member and some other conditions to be present. But America has the unique role of being the only leader within the G7 club. Stated differently, the G7 is America's institution par excellence.

If America is willing and able to lead, and is supported by a second major member, then summits will succeed if a second condition is in place if the leaders commonly remember the lessons of the past, the reigning ideas and salient lessons as interpreted by leaders in each era. If they remember the depression of the 1930s and conclude that it was caused by them all raising their tariffs, then they're less likely to engage in protectionism and more likely to promote trade liberalization through the summit and thus make a summit a success.

The third factor of the American leadership model looks to domestic politics. Summits succeed when there are no elections looming, particularly in the most important country the United States. When elections loom presidents become distracted. Even when they're able, they're less willing to lead internationally as they turn their attention to domestic affairs and the narrow interests that must be served to ensure re-election again. It's only when elections are a long way off, perhaps when those leaders have secure electoral mandates, that summits will succeed.

Let's assume for a moment that this model of American leadership is accurate, and is the best explanation of why summits succeed when they succeed, and why they fail on those occasions when they do. What then, we might ask, are the prospects for the Okinawa summit? Is it likely to be a success? If it is right, the prospects for Okinawa are relatively poor. After all, the U.S. economy, after close to a decade of vibrant growth, is now starting to slow down a little. The United States is just a little less able and willing to lead than it has been in the past. Second, most leaders are quite confident that the financial crisis of the past few years is well behind us, that growth has returned in the international economy. They have no collective memory of past failures to inspire them to adjust their national interests to hang together and cooperation through the G7 or anywhere else. And third, electoral uncertainties abound, especially in the United States. Bill Clinton comes to Okinawa as the lame duck president. All the other leaders will look him in the eye and know he won't be there next year. Why look to him to fulfill his end of the bargain when he won't be there in a year's time? And Mr. Clinton will be tempted to behave in Okinawa in ways that support the electoral prospects of his vice-president and fellow Democratic party member, Vice-President Al Gore, or even more parochially for the democratic candidate in the senate race in New York, his wife Hillary Clinton.

But as I said last time, I think Okinawa will be a successful summit. And I think that because I have a different explanation of why summits succeed. That explanation is outlined under Model B, Concert Governance. Here the first factor is predominant capabilities, a G7 whose combined power is collectively predominant in the world but whose capabilities amongst each member within the G7 are relatively equal. Under the American leadership model, summits succeed when the U.S. is more powerful than the rest, and thus able and willing to lead; under the Concert equality model, summits succeed when each member has capabilities are more equal. It's a modest America rather than a dominant America that creates collective G7 success.

The second factor is constricted participation, having as few members in the club as possible, so it's easier to come to a consensus. A small number of relatively equal members is what creates summits success. The third factor is common principles, members who agree on the same things: democratic principles, the value of a market economy, but also a shared sense of responsibility in global governance, the responsibility that major or principal powers tend to have. The fourth factor is political control by popularly elected leaders. It's the experience of having a popular mandate rather than whether or not you will be distracted by one in a coming election that matters. And fifth, crisis pooling a sense amongst members that they are all interdependent and vulnerable to the actions of the other members, especially when that vulnerability is from a crisis or shock of the same kind they faced in the past and tried to cope with on their own but failed. A second shock reminding them that they must hang together to address it in concert is a powerful cause of summit success.

We'll return in a few days to apply this concert equality model to the conditions we have now and see why I think Okinawa will be a success. But for the moment when we come back from the break we'll look at the evidence of the past twenty-five years on the first major factor that the two models disagree on. It's really a factor of capabilities, whether an America able and willing to lead, more powerful, is necessary for a successful summit, or the very opposite, whether the United States whose capabilities are more like all the other members, where there's an effective equality of capability creates a summit success.

So there we have the evidence. In the early years summits were very successful, and then in the 1980s they were much less successful. Beginning in the 1990s, beginning in 1989, they become very successful again,. How do we explain this? If you believe in the American leadership mode, you would say summits are successful when the U.S. is willing to lead and its capabilities are much greater than the others, because then it has the spare capacity, the reservoir, to lead, and is more willing to invest its surplus capacity to lead the world rather than to protect its narrow national interests at home.

On the other hand, the concert equality model predicts exactly the opposite. It is when capabilities among the members are more equal, when the United States is becoming more like the others. That's when summits succeed. To see which of the two is right on this first and defining feature, let's look at the evidence of relative capability in the international system.

We begin with a close look at relative capabilities in the international system. How do we measure relative capability? How do we really know how powerful a country is? Views differ. There is an ongoing debate since many decades in the field of international politics about what underlying capabilities really count. Some say it's military force. Some said it was that new technology nuclear weaponry presumably because nuclear weapons can be easily used to get what a country wants or to deter other countries from getting what they want. We know that all P5 members have independent nuclear weapons, but ask yourselves this question: Who do you imagine the government of Britain would actually use its nuclear weapons against as we move into the twenty-first century? Who would Britain's nuclear weapons deter from doing something that Britain didn't want? The last time the armed forces of the United Kingdom, last year in Kosovo, its nuclear weapons were irrelevant. The last time someone attacked British soil, back in the 1980s in the Falkland Islands, nuclear weapons were irrelevant.

The government of Canada has long thought that nuclear weapons, even as a deterrent, was irrelevant as a capability in the world. Canada could have been the third, maybe the fourth, country in the world to get an independent nuclear weapons capability at the start of the 1950s, at the height of the first cold war. The United States first, the Soviet Union second, the United Kingdom third, probably Canada next, but the government of Canada decided it didn't want or need them, and that they were not relevant as a specialized capability to invest taxpayers' dollars in to succeed in the world.

If not nuclear weapons, maybe capability in the world comes from having a large development assistance program. This would mean a country has surplus wealth that it can give to other countries, and buy influence that way. If that's the case, then development assistance is a premium specialized capability. Then, of course, Japan is the now most powerful country in the world.

In my mind, the best way to measure the capabilities of countries is to look at the overall productive capacity of the country, a countries gross national product the annual product of the goods and services it can produce each year. Some countries may choose to invest that productive capacity in nuclear weapons, in aircraft carriers, in military forces abroad, in official development assistance, or in other ways of securing influence in the world. Different countries make different choices about what specialized capabilities they develop. But you can measure the underlying capabilities that give them such choices according to the overall productive ability of a country the GNP before those specialized investment choices are made.

A country's GNP is measured in its own currency: Japan's in yen, Canada's in Canadian dollars, British in pound sterling. How do we compare countries across those different currency units? We simply say that prevailing exchange rates what the market says each country's currency is worth matters. So we adjust the domestic gross national product according to the relative exchange value of its currency against that of other countries. We do so by the simple formula of converting all national currencies to U.S. dollars at the exchange rates prevailing during a given year. If on one year, say 1985, the U.S. dollar is very strong, that means that any given GDP of the U.S. will look more powerful. That makes sense, because many investors in the world would then want U.S. dollars because they want to put their wealth in U.S. dollars, invest in the United States and spend in the United States. So currently prevailing exchange rates as a way of adjusting GNP well measures capabilities in the international system because it reflects what people all over the world are actually doing year in and year out. In short, it takes full account of the markets that matter more as the era of globalization comes.

So that's how we measure relative capability: overall production in a country times the value of that country's currency in U.S. dollars in a given year. So what does this tell us?

The story is told in this final column it shows that in the past fifty years there have been massive changes in relative capability amongst G7 members in the international system. More particularly, massive changes in the relative capability of the U.S. In particular, the decline of the U.S. from being a predominant power at the beginning of the system to a much more modest America now, a United States far more like its other G7 partners than it was fifty or event twenty-five years ago.

Please look at 1955. In that year, of all the major powers in the world taken together, the countries later to form the G7 plus the Soviet Union plus China, you will see that the United States all by itself has a percentage of the G9 (the nine principle powers in the international system) over 59% of all the capabilities. That was an extraordinary concentration, with an overwhelming predominant United States, a hegemony at its finest. In that year, amongst the future G7 countries, the United States had an even larger share 65.9%. That's almost two thirds. Imagine a club where the leaders of seven countries got together but only one controlled two thirds of the wealth. Who would lead? Who would determine outcomes in that club? Again, an unprecedented concentration of wealth, a world in which the United States was all by itself it didn't need to cooperate with any other country no matter how close it might otherwise by. Not little Japan, which in 1955 had only 5% of the capabilities; not Canada, which in 1955 was more powerful than Japan but still had only 6.4% of the capabilities of the United States. Both Canada and Japan in 1955 were very small and the United States did not need us. So these relative capability figures show.

Flash forward to 1970. By then the United States' share of capabilities in the group of nine, the major power system as a whole, had dropped to 44.6%, from majority to minority of capabilities. The U.S. by itself by its own power no longer had a majority, and could no longer provide global governance by itself.

In 1970 the U.S. could no longer provide global governance as it had in previous decades because its predominant capabilities in the system had gone, and gone for good. Even with President Reagan coming into power, standing tall, riding high in the saddle, making the U.S. feel proud again, or in the 1990s with its Goldilocks economy, with information technology and the Internet allowing the United States to dominate global markets in the age of the "new economy," never again has the U.S. come close to regaining its predominance. If America was going to get the global governance it wanted it needed help from its friends.

In 1970, if the United States were to have gathered into one room all its closest friends what were soon to become the G7 countries, and it looked at the combined capabilities of this G7 group, it would find that the United States still had a majority 54.6% so if its members had to bargain, who do you think would win? Probably the country that controls the majority of the capabilities?

So the incentive structure was very clear. It was a matter of hard, cold, rational logic of the sort economists understand. In 1970, the United States knew it no longer had the capabilities to provide global governance to shape outcomes around the world all by itself. It knew it needed help from its friends. Which friends? If it brought together the countries that would later form the G7 they would give it enough additional capability so it could control the world. In 1970 the United States with all the G7 would still be able to control the club. The Americans said, "We will create a club, and we will use it to dominate the world. It will look like G7 dominance, but it will really be a way for American interests to predominate because we will be able to determine what the G7 collectively does."

This may have seemed a good idea for the United States, but why would any other G7 country come to such a gathering? Why would they join a club the Americans would use to control the world? After all, those years from 1970 to 1975 were years of crisis for the United States, years in which the relative capability of virtually every other G7 partner was going up vis-à-vis the United States. The day was growing nigh, if they could wait, when they could form a club on more equal terms. And it was in 1975 that the G7 was formed, because only in that year look at the numbers the United States' relative capability amongst the G7 members had fallen to 46.9%. America could not, all by itself, dominate this new club. If all the other members combined against the U.S. they would have more capability than the U.S. alone.

Please understand that at a G7 meeting, decisions are not made as countries vote according to the size of their GNP in its U.S. dollar value that year. Some international institutions work that way the International Monetary Fund, with its weighted voting, for example but not the G7. Rather, the G7 is a concert of equals, one leader of each country at the table, all democratically elected, all leading a major democratic power in the top tier. So if one leader is smarter, brighter, more alert, more clever, has better jokes than the others, he or she can take the lead. Even when a country sends a great leader Prime Minister Yasuhiro Nakasone from Japan, Prime Minister Brian Mulroney from Canada Ronald Reagan really liked Yasu and Brian this is international politics. Even though Reagan liked them, in the real world of international politics, leaders always ask how powerful is the underlying GNP, so relative capability matters in deciding who gets what.

One could design a system of global governance according to a different principle. They tried to do that with the United Nations in the General Assembly, in the Security Council, in the world of 1945 they said, "These are all sovereign states, and we will treat them all equally one country, one vote." Even in the Security Council, the U.S. with its military forces all over the world was treated equally as, say, France, which was still occupied by foreign military sources, and some of whose citizens had collaborated with the Nazis in the Second World War. The sovereign equality of the states is a fiction. In the parlance of the time, it was said that "You can give all the squirrels certificates that say they are elephants and you can get the elephants to sign certificates that they believe the squirrels are elephants, but in the real world none of the elephants or squirrels will believe it or behave as if it's true.

So the G7 was formed when the United States knew it needed help from its partners, but its partners knew it could no longer predominate or have the majority there was a chance that this was a club where all members were equals. During the next five years that proved to be true. Look at the numbers the U.S. share of capabilities dropping all the way down to 41% by 1979. Capabilities within the G7 with the Americans becoming more equal among the members. How did the summit perform as it became more of a summit of equals? Remember those first five years were high-performing summits that produced the A grades. America needed help. It knew it needed help. America was forced to listen, to adjust, and the concert of equals worked through this adjustment and generated high G7 successes. The concert equality model, and not the one of predominant American capabilities and American leadership, seems to account for the record of those first five years.

What about the next five years? All of a sudden, the United States' relative capabilities start to rise again, until a mere five years later in 1985 the first five years of the Reagan revolution the United States has regained a majority of capabilities in the G7. It's becoming predominant at 51% over the threshold of a majority. The United States can dominate the G7. Maybe in such a world it doesn't really need a G7. Maybe other countries don't want to stay in the G7, which the United States is now in a position to control.

American capabilities every more positioned for leadership, soaring above the majoritarian threshold how does the summit perform? The summit performed very badly indeed. Lousy marks, and at the end of the period, 1985, the year when U.S. restored capabilities are at their zenith over the majoritarian threshold, the high point of American predominance and leadership, the Bonn summit gets the worst grade in history. The first five years showed that when capability amongst the G7 members was becoming more equal; the second five years showed than when capabilities were becoming less equal, the summits performed poorly indeed. These are two sides of the same coin: equality produces successful summits, and inequality American leadership does not.

After 1985, the United States begins to decline again. The great Reagan revival proved to be as ephemeral and transitory as a rainbow at the end of a thunderstorm. It evaporated quickly. As American capabilities declined again and capabilities became more equal, the summit began to perform more effectively once again. The more equal the capabilities, the more effective the G7 is. What the world needs is not primarily a proud, powerful America wanted to lead it; rather it needs a modest America, an America forced to listen and learn and adjust to what its increasingly equal partners thing: mutual adjustment, concerted decision. That's when and how the G7 works.


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